US Ad Spending Finally Has Growth To Be Proud Of Says Merrill Lynch

According to Advertising Age, advertising has grown each month, excluding February 2003, since May 2002. Merrill Lynch expects this growth to continue in line with GDP which is expected to grow by 6.5% this year. The forthcoming Olympics and presidential elections should further improve the situation.

The growth of personal video recorders is creating much uncertainty according to the report. A recent survey by Forrester Research suggests that advertisers are ready to shift spending from television towards other media if commercial break skipping is to be prevalent. However, another study by media buyer, Mindshare, suggests that the threat of PVRs may be overstated (see PVRs Wont Destroy TV Advertising Says Mindshare).

March was a particularly good month compared to last year, when the Iraq war begun. There was a surge in spending at the end of the last quarter as clients realised they had budgets to spend on advertising and this is “wreaking havoc with forecasting” says Merrill Lynch.

Newspapers

Newspaper advertising accelerated in March with growth averaging 6-8% during the month, finishing the quarter up 4.5-5%. Merrill Lynch believes that strength in March was thanks to pre-Easter advertising.

Television

Broadcasting and Cable reported that net advertising revenues for ABC, CBS & NBC were up nearly 11% to $2.94 billion for quarter one 2004.

Advertising Age, reported last week that spending within children’s programming was off to a bullish start, with advertising prices soaring as much as 20%. Advertising demand in the entertainment categories, including children targeted DVD & video sales, electronics and video games were the main driver says the report. Merrill Lynch entertainment analysts anticipate the four major networks to collectively post CPM and total dollar growth in the mid-single digit range for the coming year.

Television station revenues were up at a high single digital rate in quarter one and quarter two is expected to be at a similar rate, although political spending is volatile says Merrill Lynch.

Radio

The US Radio Advertising Bureau (RAB) announced that in quarter one 2004, radio advertising revenue was up 10% period on period, down 2% on the same period last year.

Local advertising revenue grew 11% and national was up 5% for the quarter. Year-to-date radio advertising revenues are up 4%, with local up 5% and national advertising revenues up 1%.

Merrill Lynch expects local adverting revenue growth to continue during 2004 and maintain their forecast for the remainder of the year, causing full-year 2004 estimates to increase slightly to 6.1% from 6%. In April, Merrill Lynch revised estimates down from 8% because US radio revenue results were weaker than expected (see US Radio Revenues Not Meeting Expectations)

Magazines

Magazine advertising revenues rose 6.7% in March 2004 and year to date magazine rate card advertising revenues are up 7%, with a 2.3% decline in advertising pages.

Online

The Interactive Advertising Bureau and PricewaterhouseCoopers released the final internet advertising figures for quarter three, quarter four and full-year 2003 (see Internet Ad Revenue Grows By 21%). Overall, industry revenues rose by nearly 21%, ending 2003 at just under $7.3 billion.

United Kingdom

Marketing budgets in the UK are set to rise in 2004/2005, with 35% of this being spent on television advertising according to the UK Budgeting Survey.

Internet marketing budgets rose by more than any other medium for this quarter, followed by direct marketing. One in three companies surveyed for the Bellwether Report said that they were increasing internet marketing budgets for the next quarter and only 2% said they would decrease. For direct marketing, nearly 25% of companies said they would increase spending for the next quarter.